Saturday, July 9, 2016

ANALYSIS ON PAY COMMISSION



1.      7th Pay Commission – Historic salary hike – says Arun Jaitley                 7th Pay Commission - In a tweet, Jaitley said: “Congratulations to central government officers, employees & pensioners on a historic rise in their salary & allowances through the 7th CPC.”                                                          For the purpose of revision of pay and pension, a fitment factor of 2.57 will be applied across all Levels in the Pay Matrices                                                               As estimated by the 7th CPC, the additional financial impact on account of implementation of all its recommendations in 2016-17 will be Rs. 1,02,100 crore. There will be an additional implication of Rs. 12,133 crore on account of payments of arrears of pay and pension for two months of 2015-16.        The acceptance of the pay commission recommendations is a potential boost to the consumer economy                                                                                                    It is surely historic as the minimum rise in salary i.e., 14.27% is the lowest in  70 years.                                                                 .                                                                                                      The hike is only 14.27% and not 23.57%  as being advertised  and the much hyped additional expenditure of Rs 1,02,100 crores and 12,133 crores on account of payments of arrears is totally false and misleading for example one installment of DA, taking
 the average of 6% payable to employees and the pensioners costs the
 exchequer Rs.11000 crores as per the reports issued by FINMIN, and
 14.27% costs approx Rs.28000 crores, and the arrears from 1-1-2016 to 31-03-2016 costs approx 7000 crores. Since, 74000 crores has already been allotted,  what will happen to the remaining unspent allocated amount of Rs 35000 crores  (i.e. expenditure  70000-(28000+7000)=35000 this is strategy being played by the GOVT  even in the budget there is no such receipt and expenditure statement in budget estimates for example funds are allocated to water works (Irrigation department) and for any project like polavaram meager amount is being drawn from that pool and allocated and the unutilized amount is being diverted towards MISC expenditures like tour costs for tourist MODI     
 
Through the press release circulated to media and the statement of Finance Minister, the Government made a calculated move to create an impression among the public that the Modi Government is magnanimous enough to extend big bonanza to the Central Government employees. Eventhough, immediately after submission of the 7th CPC report, the Joint Council of Action of Central Government Employees (NJCA) representing Railways, Defence and Confederation including Postal had submitted a memorandum to Government demanding modifications of the retrograde recommendations of the 7thCPC, the Government while announcing its decision, rejected all the demands raised by the staff side.

The 7th CPC recommended only Rs.18000/- as minimum pay by arbitrarily modifying and manipulating Dr. Aykroyd’s Need based minimum wage formula on untenable premises and incorrect data. The main demand of the NJCA is to re-compute the minimum wage on the basis of actual commodity prices as on 01.07.2015 and factor Dr. Aykroyd formula stipulated percentage for housing, social obligations and children’s education etc. and to revise the fitment formula and all pay scales on the basis of the so determined minimum wage. The methodology adopted by 7th CPC is irrational, imaginary and even absurd. The major contention is on the minimum wage, which is being demanded to be Rs.26,000  with 3.68 fitment formula which is in accordance with Dr. Aykroyd formula.

The Government’s claim that big increase is given to the employees is totally false. In para 4.2.9 of the report, the 7th CPC has given a table depicting the percentage of increase provided by the successive pay commissions appointed after independence. According to the table, the 2nd CPC has made a paltry increase of 14.2.% (1960), the 3rd CPC gave a rise of 20.6% (1973), the 4th CPC 27.6% (1986), the 5th CPC 31% (1996) and 6thCPC 54% (2006) whereas the average increase granted by 7th CPC is only 14.29% (2016), while the percentage increase had been in ascending order all along, the 7th CPC has sought to reverse that trend. The meager increase recommended and accepted by the Government without any change is the worst ever any pay commission has recommended since 1960. In 1960 five days historic strike of entire Central Government employees took lace demanding modifications of 2nd CPC recommendations.

Another claim of the Government is that it has accepted the recommendations of the 7th CPC to increase the existing salary by 2.57 times! This is a totally misleading propaganda. The existing basic pay of a lowest level employee of the Central Government called Multi-Tasking staff (MTS) is 7000 plus 125% Dearness Allowance as on 01.01.2016. Thus the total salary as on 1st January 2016 is 7000 + 8750 DA = 15750. The Minimum pay recommended by 7th CPC is 18000 i.e; the actual increase in salary is Rs. 2250/- only at the lowest level. The fitment factor of 2.57 is worked out excluding the 125% DA an employee is getting at present. As the next wage revision takes place only after ten years in 2026, the above increase of 2250/- in the salary is meagre.In what way this will be a potential boost to the consumer economy as the minimal hike will go towards the EMIs on loans already acquired by the employee.

2.     In the past, every time, either before or immediately after the appointment of pay commissions, the employees are granted DA merger, Last time, before appointment of 6th CPC, Government has granted merger of 50% DA in 2004 and the merged DA is treated as Pay for all purposes. This time no DA merger is granted. Suppose, as in the past, the Government has accepted the demand for merger of 50% DA as on 01.01.2011 when DA crossed 50%, the total salary of an employee at the lowest level as on 01.01.2016 will become Rs.18395/- (7000 + 50% DA 3500 = 10500 + remaining 75% DA as on 01.01.2016 Rs.7875 = 18395). Thus it can be seen that even if no pay commission is appointed by Government, simply by granting DA merger alone the lowest level salary will become more than 18000/- which is recommended by 7th CPC after 21 months study and spending crores of rupees for its functioning                                                                                                                        The minimum pay has been increased from Rs. 7000 to 18000 p.m. Starting salary of a newly recruited employee at lowest level will now be Rs. 18000 whereas for a freshly recruited Class I officer, it will be Rs. 56100. This reflects a compression ratio of 1:3.12 signifying that pay of a Class I officer on direct recruitment will be three times the pay of an entrant at lowest level.
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The Government’s press release furnished above further claim that the ratio between lowest and highest salary (compression ratio) is 1:3.12. The highest level employees are Cabinet Secretary and Secretaries of various departments. The recommended salary of the Cabinet Secretary is 2,50000. Government deliberately avoided comparison between salary of lowest employee and highest level employee, instead compared with middle level Class-I officer only. Actual ratio between the lowest and highest salary come to 1:14 (18000:2,50000). No other pay commission has recommended such a huge margin.  
                                                                                 
  D.KISHAN RAO
GENERAL SECRETARY                                                                                 

2 comments:

P.S.BABU said...

Very useful Analysis
=PSBABU

P.S.BABU said...

Very useful Analysis
=PSBABU